Coupons first saw widespread use in the United States in 1909 when C. W. Post conceived the idea to help sell breakfast cereals and other products. Today, more than 2,800 consumer packaged goods companies offer coupons for discounts on products. In 2010, coupons for consumer packaged goods generated more than 3.5 billion dollars in transactions within the U.S. alone.
There are many different types of online coupons such as discounts, free shipping, first-time customer coupons, and free giveaways.
Coupons can be used to research the price sensitivity of different groups of buyers (by sending out coupons with different dollar values to different groups). In addition, it is generally assumed that buyers who take the effort to collect and use coupons are more price sensitive than those who do not. Therefore, the posted price paid by price-insensitive buyers can be increased, while using coupon discounts to maintain the price for price-sensitive buyers (who would not buy at a higher price).
Online retailers often refer to coupons as “coupon codes,” “promotional codes,” “promotion codes,” “discount codes,” “key codes,” “promo codes,” “surplus codes,” “portable codes,” “shopping codes,” “voucher codes,” “reward codes” or “source codes.” Internet coupons typically provide for reduced cost or free shipping, a specific dollar or percentage discount, or some other offer to encourage consumers to purchase specific products or to purchase from specific retailers.
Many retailers and companies now offer protection from unauthorized copying or use via several verification methods including unique barcodes and coupon ID numbers, holographic seals, and watermarked paper.